MUFG Research discusses GBP outlook and maintains a bearish bias in the near-term.
"The pound along with most of the rest of G10 FX is broadly stable so far this morning with little news to drive volatility – a feature that may persist until we get the key inflation data from the US tomorrow...Separate reports highlighted the potential strains ahead for consumers being squeezed by rising costs of essentials. Research from property site Zoopla revealed rental growth of nearly 20% in inner London in Q1 2022 and 10% in outer London growth in Q1 2019 was 2%. That is fuelling significant increases in rents reinforced by a marked drop in supply," MUFG notes
"So the outlook for consumer spending remains grim with the potential for much greater public sector strike action than on the continent. The nursing union RCN – is recommending strike action by its 465k members which would be the first ever strike by nurses in the UK. GBP/USD will be unable to hold levels above 1.2000 as downside risks persist," MUFG adds.